Public and Private Welfare State Institutions: A Formal Theory of American Exceptionalism

Kaj Thomsson

No 822, Working Paper Series from Research Institute of Industrial Economics

Abstract: I construct a model of public policy development, and use the model to explain why the United States has a comparatively small public sector, but instead a large "private welfare state" with employment-based benefits. The key factors are politically organized firms and labor unions. These interest groups can use campaign support to influence a political decision-maker who decides whether to implement a social benefit. In addition, the firms can influence the outcome indirectly by privately providing their own workers with the benefit. This setup leads to three possible outcomes. In the first, no one is provided the social benefit. In the second, all workers receive it through government provision. In the third, some workers receive the policy, through their employers. I argue that the features leading to the third equilibrium correspond closely to political institutions and industry characteristics of the US, while the features of the second equilibrium better describe European countries.

Keywords: Political Economy; Interest Groups; Institutions; Welfare States (search for similar items in EconPapers)
JEL-codes: D72 D78 H11 H50 N42 P51 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2010-02-05
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp822.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0822

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().